Energy East was never the “nation building” project we made it out to be

By Richard Forbes.

It was well past one o’clock in the morning when John Henry Pope – at that time, acting Minister of Railways – arrived by carriage to twist the arm of the then-prime minister, Sir John A Macdonald, forcing him to reconsider a loan, however reluctantly, to keep the Canadian Pacific project afloat.1 Sir Van Horne describes Pope, cigar in his mouth, pressing on a tired Macdonald (who he had dragged out of bed to lobby.)

The result of Pope’s ‘thirteenth hour’ intervention was the Railway Relief Act of 1884, an emergency loan to the tune of $22.5 million. An extraordinary bet on the project which reflects the sheer significance the intercontinental railway carried for both Macdonald’s Conservatives and Confederation. The former had staked its government and the fate of our then fledgling country on the creation of the railway, tying it to Confederation as one of the most notable conditions for British Columbia joining Canada. Failure for the CPR could have been met with the cession of BC to the US.

When we use the word “nation-building” in Canada, the Canadian Pacific Railway is the universal benchmark by which we judge all other such projects in their capacity to transform Canada. That’s what nation-building looks like. Invoking the railway’s legacy shouldn’t be done lightly. But, perhaps not unsurprising, what we’re seeing in the wake of TransCanada’s decision to pull Energy East is a legion of partisans ready and willing to mischaracterize the demise of Energy East as a setback for the country’s development, having spent months now building Energy East up to Canadians as an act of “nation-building” it never was, nor could be.

For instance, Financial Post‘s Claudia Cattaneo writes, “the cancellation of Energy East is the last of the big, nation-building pipeline decisions that resulted from Prime Minister Justin Trudeau’s forced transition to greener energy.”

Over the long weekend, we saw our fair share of irresponsible rhetoric emanating from various corners of the country. Leadership hopefuls for Alberta’s new United Conservative Party, Brian Jean and Jason Kenney competed for the most heated exchanges of words – directing their scorn towards Quebec’s resistance to the pipeline, Notley’s hopes to engender a social license, and federal climate change policy.

Brian Jean called the cancellation, “a shameful moment in Canadian history, an attack on Alberta,” adding that “Canada will now continue to import foreign dictator oil in our refineries instead of Alberta oil.” (“It’s shameful.”) He also attacked Montreal mayor Denis Coderre and Canada’s equalization transfers.

Jason Kenney said the project’s demise was a “huge blow to our economic future, a huge win for dictator oil,” while also attacking Coderre and advocating for a referendum to “trigger” negotiations for equalization reform.

Former Wildrose leader Danielle Smith posed the question to social media whether Alberta ought to separate from Canada, saying “listeners want me to ask.” The implication of her post (if I’m interpreting it correctly) was she felt the “rest of Canada” had disrespected Alberta in the wake of Energy East falling through.

Brian Jean (above) and Jason Kenney are vying for the leadership of Alberta’s new Conservative party after a merger of the PCs and the Wildroses this summer.

Lost in this rhetoric and posturing, however, is the reality: Energy East was never a nation-building exercise, but rather a business proposal made in light of regulatory challenges – the politics of which have divided the country; placing Quebec (one of the few areas where a new pipeline would have had to have been built to realize Energy East) against Alberta and New Brunswick (where some have even suggested the bitumen would have been mostly exported, rather than refined due to capacity.) The proposal has burgeoned into a glorious political opportunity for Albertan politicos and Tories gunning for the premier’s office and the federal party’s leadership to bash soft targets (Quebec, Trudeau, Notley, “Activists”) and raise old prejudices among their political bases, while doubling down on competitively ridiculous responses, like holding a referendum, or Lisa Raitt’s proposal to use the Notwithstanding Clause to silence environmental activists.

Energy East was never “Plan A” for TransCanada, at best, it was “Plan B.” Recycling parts of an intercontinental natural gas line, while building key new segments through Quebec, Energy East was an alternative to Keystone XL. Writing in the Globe and Mail, economist Andrew Leach has done an excellent job describing the complex confluence of certain economic, political and bureaucratic factors that made and unmade Energy East (e.g., the cost of oil, NEB rules and priorities, Obama’s decision to kill Keystone XL, Trump’s decision to revive it.) In short, Energy East was killed because TransCanada deemed it no longer necessary to meet demand. The market giveth Energy East and the market taketh away.

Bearing this in mind, the economic impact of Energy East’s demise is strictly neutral for the oil and gas industry in Canada, but as far as the political impact is concerned, the project’s cancellation should have come as a relief to our country, undercutting another messy interregional feud rather than exasperate it.

And yet exasperation is exactly what we’ve seen this past week from Canada’s Conservatives, both at Ottawa and in the Prairies…

Together, Tories of all stripes have been hard at work, milking TransCanada’s decision for all its worth as a political opportunity: stirring old prejudices, exploiting fractures and fissures in Canadian unity, and mischaracterizing TransCanada’s decision as a response to Quebec – all in the hopes ultimately of driving a wedge between different parts of the country for cheap political and electoral gains.

A protester at a heated NEB consultation session in Montreal.

Energy East was always going to be a challenge for Canadian federalism to surmount. It was in Quebec, of course, where the project attracted the lion’s share of its controversy – some charging the NEB with cronyism, loose ethics, and questionable credibility. Outside Quebec, Energy East was a lightning rod though, spawning populist rancor in its defense. Indeed, as a topic of national discussion, Energy East could hardly be called “constructive.”

Cause for concern is the ease with which some have hitched the country itself to a pipeline with such intellectual dishonesty, reveling in – rather than tempering – the divisions this rhetoric has sparked. Diehard partisans have wildly exaggerated the extent to which Canada imports non-US oil (“dictator oil”), while advocating for oil self-sufficiency, the very principle behind the National Energy Program (NEP) which once sparked outrage and contempt for Ottawa throughout Alberta.

If these folks actually wanted to help “build” Canada, a good start for said nation-building would be to drop their ‘Quebec bashing.’

While these same voices have gleefully chided Quebec for not welcoming their “nation-building” project with open arms, the Quebec separatist movement – the ultimate benefactor of this kind of divisive rhetoric – remains only dormant, never dead (Arguably, independence is going through a comparatively quiet process of re-branding for a new generation via Gabriel Nadeau-Dubois and Quebec Solidarie.)

Granted, on the whole, Energy East will probably not endure as a long standing grievance – an issue directly threatening national unity – at least, not to the extent of, say, the weighty mega-constitutional politics and the energy crisis of the 70s, 80s, and 90s did, but it’s still important to recognize the persisting fragility of our federalism. Wounds in the country’s unity often multiple, healing only at a glacial pace. If it comes to pass that Canada is at risk of breaking up once again, the co-authors of this crisis – Canada’s Kenneys, Jeans and Walls – will be as useless and unrepentant as Preston Manning was in ’95, leaving the adults among us to keep this country together.